System, method, and program product for unit transfer fee processing

ABSTRACT

A method, system and program product, the method comprising: accessing Transfer Fee data to be paid to a third party that is not the borrower or the lender of a security for a right to loan one or more units of the security; accessing loan data on a loan of units of the security, calculating an amount of a Transfer Fee for the right to loan the security; generating data for debiting an account or sending a bill for the Transfer Fee; sending or having sent data on revenue from one or more of the Transfer Fees to be paid to an issuer of the security; updating the database with data on the Transfer Fee.

FIELD OF THE INVENTION

The present invention relates to transfer fees for security loans.

BACKGROUND

The total US equity market capitalization is 15.3 trillion dollarsrepresented in approximately 300 billion shares of securities, the USDebt Market is comprised of 35 trillion dollars represented by 350billion securities. The stock, bond and fund loan market is a dealermarket. No statistics are published on this market, but industryestimates suggest that at least half of the securities in the market areavailable for loan at any one time.

SUMMARY

Some embodiments of a method consistent with the present inventioncomprise: accessing, using one or more computers, data held in one ormore databases on a required fee (“Transfer Fee”) to be paid to a thirdparty that is not the borrower or the lender of a security for a rightto loan one or more units of the security; accessing, using the one ormore computers, loan data on a loan of one or more units of thesecurity, the loan data comprising the number of the units of thesecurity and/or value data for the number of units of the securityloaned and/or the fact of the loan, and an identification of one or moreof a lender of the security or a borrower of the security; correlating,using the one or more computers, the loan data for the loan of thesecurity with the Transfer Fee data for the right to loan the security;calculating or having calculated and/or determining or having determinedan amount of a Transfer Fee for the right to loan the number of units orvalue of the security based at least in part on the Transfer Fee datafor the respective security; debiting or having debited and/orgenerating data for debiting at least one account and/or generating orhaving generated and/or sending or having sent at least one bill, usingthe one or more computers, for the amount of the Transfer Fee to be paidto the third party that is not the borrower or the lender of thesecurity for a right to loan the number of units or value of thesecurity, based at least in part on the calculating and/or determiningstep; sending or having sent or generating or having generated, data onrevenue from one or more of the Transfer Fees to be paid to an issuer ofthe security if the security is issued by a collective investmentvehicle or other entity where the Transfer Fee may be accrued or is tobe accrued; and updating, using the one or more computers, the one ormore databases with the amount of the Transfer Fee determined and/orcalculated and/or debited and/or billed and/or an amount of the TransferFee received by the third party that is not the borrower or the lenderof the security for the loan of the number of units or value of thesecurity.

In embodiments, the Transfer Fee may be based at least in part on a feealgorithm comprising an amount per time period, the sending or havingsent or generating or having generated data step may further compriseaccruing the amount of the Transfer Fee for the right to loan the numberof units of the security of the collective investment vehicle as thetime periods for the loan of the security elapse; and updating or havingupdated, using the one or more computers, the one or more databasesperiodically or on an ad hoc basis to obtain a current accrued amount ofthe Transfer Fee for use in calculating the NAV for the collectiveinvestment vehicle.

In embodiments, the one or more databases may contain data for aprospectus for the security and/or a contract relating to the security,with the data for the prospectus and/or the contract including a feealgorithm or a reference to a fee algorithm.

In embodiments, the one or more databases may contain a contractcomprising a trust agreement for the security.

In embodiments, the Transfer Fee may be cash money.

In embodiments, the security may be an ETF unit, a bond, a common stock,or a closed end collective investment vehicle unit.

In embodiments, the Transfer Fee may comprise a fee to be calculated atleast in part using a fee algorithm selected from the group of a fixedfee, a fee/per time period, a fee that varies at least in part with thelength of the lending period, a fee that varies at least in part on thenumber of units of the security loaned, a fee that varies at least inpart on a price of a unit of the security, and a fee based on twodimensional tiering using the number of units loaned as one tierparameter.

In embodiments, the updating step may be performed on a substantiallyreal time basis as data is received on the loan of securities.

In embodiments, the method may further comprise debiting of an accountassociated directly or indirectly with the lender of the securitiesbased at least in part on the calculating and/or determining step. Inembodiments, the account may held by the lender in a universal clearingservice for the security.

In embodiments, the method may further comprise generating and sendingor having sent a bill, for the amount of the Transfer Fee, based atleast in part on the calculating and/or determining step.

In embodiments, the method may further comprise generating data, usingthe one or more computers, for providing a Web interface for receivingdata on a loan of units of the security.

In embodiments, the receiving data step comprises receiving notificationof a loan of units of the security from a universal clearing service forthe security.

In embodiments, the accessing Transfer Fee data step may compriseobtaining identification of both the lender of a security and theborrower of the security.

In embodiments, the calculating and/or determining the amount of theTransfer Fee may comprise allocating at least a portion of the feeamount to each of the lender and the borrower.

In embodiments, the method may further comprise aggregating fees, usingthe one or more computers, paid by the lender and/or the borrower todetermine if there is a full fee payment of the Transfer Fee for theloan, or whether there is a shortfall; assessing, using the one or morecomputers, all or a portion of the shortfall in the entire Transfer Feeamount against one of the lender and the borrower if the other of thelender and borrower has not paid their respective portion of the feeamount; and debiting an account and or billing to one of the lender andthe borrower an increased amount comprising all or a portion of theshortfall if the other of the lender and the borrower that has failed topay their portion of the fees for the loan.

In embodiments, the method may further comprise determining, using theone or more computers, interest and/or a penalty on one or both of theparties for any late payment of the Transfer Fees for the loan; anddebiting an account and or billing to the one or both of the lender orborrower parties for any late payment of the Transfer Fees for the loanof the security.

In embodiments, the accessing Transfer Fee data step may compriseobtaining a registration of a loan of a security from one of the lenderof the security or the borrower of the security; and the steps ofdetermining, using the one or more computers, if there is matchingregistration of the loan from the other of the lender and the borrower;and entering or having entered data, using the one or more computers,indicating matching registrations for the loan, or a failure todetermine matching registrations for the loan.

In embodiments, the method may further comprise generating data, usingthe one or more computers, for an electronic screen display representinga lender-borrower chain.

In embodiments, the method may further comprise writing, using the oneor more computers, an amendment to a prospectus in a prospectus databaseto add language on the required Transfer Fee to be paid to the thirdparty for a right to loan one or more units of the security.

In embodiments, the method may further comprise generating and sendingor having sent, using the one or more computers, a notification of alender-borrower chain for the loan of the security.

In embodiments, the method may further comprise generating and sendingor having sent, using the one or more computers, a notification of adividend, interest or distribution associated with an owner of thesecurity.

In embodiments, the method may further comprise calculating or havingcalculated, using the one or more computers, a net asset value (NAV) forthe collective investment vehicle, using the accrued Transfer Fees as apart of a value of the collective investment vehicle. In embodiments,the collective investment vehicle may be an exchange traded fund, or aclosed end fund.

Some embodiments of a system consistent with the present inventioncomprise one or more computers, configured to perform the followingsteps: accessing, using one or more computers, data held in one or moredatabases on required fee (“Transfer Fee”) to be paid to a third partythat is not the borrower or the lender of a security for a right to loanone or more units of the security; accessing, using the one or morecomputers, loan data on a loan of one or more units of the security, theloan data comprising the number of units of the security and/or valuedata for the security loaned and/or the fact of the loan, and anidentification of one or more of a lender of the security or a borrowerof the security; correlating, using the one or more computers, the loandata for the loan of the security with the Transfer Fee data for theright to loan the security; calculating or having calculated and/ordetermining or having determined an amount of a Transfer Fee for theright to loan the number of or value of the security based at least inpart on the Transfer Fee data for the respective security; debiting orhaving debited and/or generating data for debiting at least one accountand/or generating or having generated and/or sending or having sent atleast one bill, using the one or more computers, for the amount of theTransfer Fee to be paid to the third party that is not the borrower orthe lender of the security for a right to loan the number of units orvalue of the security, based at least in part on the calculating and/ordetermining step; sending or having sent or generating or havinggenerated, data on revenue from one or more of the Transfer Fees to bepaid to an issuer of the security if the security is issued by acollective investment vehicle or other entity where the Transfer Fee maybe accrued or is to be accrued; updating, using the one or morecomputers, the one or more databases with the amount of the Transfer Feedetermined and/or calculated and/or debited and/or billed and/or anamount of the Transfer Fee received by the third party that is not theborrower or the lender of the security for the loan of the number ofunits or value of the security.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a schematic block diagram representing some embodiments of theinvention.

FIG. 2 is a flowchart for implementing embodiments of the invention.

FIG. 3 is a schematic block diagram of a computer configuration forimplementing embodiments of the invention.

FIG. 4 is a schematic block diagram of a system and programconfiguration for implementing embodiments of the invention.

DETAILED DESCRIPTION

The present invention comprises a management system, method and programproduct to allow collective investment vehicles and other securityissuers to arrange to be compensated for permitting their securities tobe loaned. In embodiments, such borrowed securities may be used tosettle short sale transactions. In embodiments, the operations describedherein may apply to exchange traded funds (ETF's), closed end funds, andany security where the compensation to the issuer may be accruedperiodically, e.g., daily, to aid in pricing of the security or options,swaps and other derivatives based on the security.

In order to settle a short sale transaction, the short seller mustborrow securities to deliver to the buyer. In such a securities loan, anagreement is created between the lender and borrower specifying therights and obligations of both parties. The lender is typically givencash collateral securing the borrower's obligation to return theborrowed securities on demand. The lender may invest the cash and retainall or a portion of the income as negotiated between the lender and theborrower. The borrower may also be required to pay additional sums tothe lender if the yield on the investment is not sufficient to offsetthe loan fees. The securities loan agreement permits the borrower totreat the borrowed securities as if it owned them outright, including aright to sell them or re-lend them, subject to its obligation to returnthe securities based on the agreement. During the course of thesecurities loan, the borrower is obligated to compensate the lender forany dividends, interest, or other distributions to which the lenderwould be entitled. Because the borrower can re-lend or sell thesecurities, because both the lender and the person buying the borrowedsecurities from the borrower, are economically “long” the security, thesecurities loan has doubled the notional exposure of the securities. Inthe case of ETFs, the borrower can even redeem the borrowed units,leaving more notional value outstanding than the number of units issuedby the collective investment vehicle. Accordingly, as security loantransactions may be serialized, short interest in a collectiveinvestment vehicle may actually exceed the number of issued units of thecollective investment vehicle. Further, in the case of an ETF, theexpenses of the collective investment vehicle are borne by a smallernumber of unit holders than the number of persons having a notionalinterest in the performance of the collective investment vehicle. Inessence, it is recognized herein that the securities loan deprives thecollective investment vehicle of additional income which could be usedto the benefit of all actual holders. The present technology will allowthe collective investment vehicle to capture these lost fees.

Embodiments of the present method, system and program product seek toenable a collective investment vehicle or security issuer to capturefees (“Transfer Fee”) by requiring the lender or borrower or both ortheir respective agents or another entity, to register with an entitythat will record each loan in one or more databases. In embodiments, anexample data structure for such a registration may comprise one or moreof a security identifier, a number of units loaned or to be loaned, arate and a term of the loan, and an identifier of the lender and/or theborrower. After terms of the loan are registered, the collectiveinvestment vehicle or its agent may debit an account and/or bill eitherparty or both parties for the Transfer Fee. In embodiments, the TransferFee may comprise a part or all of a management fee that would have beenpaid had all of the notional interest been represented by actual issuedunits.

In embodiments, the various transactions and transfers to be describedherein, may take place using the systems and components shown in FIGS.1, 3 and 4, although one of skill in the art will appreciate that manyvariations of the system may be implemented without departing from thescope of the invention. In embodiments, suitable networking protocolsmay be used, including the Transport Control Protocol/Internet Protocol(TCP/IP) suite of protocols, and also including the HyperText TransportProtocol (HTTP) and associated security protocols HTTPS, and othermechanisms such as Virtual Private Networking (VPN), Secure SocketsLayer (SSL), Transport Layer Security (TLS), tunneling protocols such asGeneric Routing and Encapsulation (GRE), Layer 2 Tunneling Protocol(L2TP), and the like. Another protocol that may be used to facilitatethe transactions and associated messaging described herein is theFinancial Information exchange (FIX) Protocol, which is a messagingstandard developed specifically for the real-time electronic exchange ofsecurities transactions. FIX is a public-domain specification owned andmaintained by FIX Protocol, Ltd. In addition, some of the transactionsmay be communicated in a manual fashion, such as via telephone ortextual messaging (email, and the like), whereupon the relevanttransaction information may be keyed, scanned or otherwise entered intothe appropriate computer systems.

Referring to FIG. 1, embodiments are illustrated of data communicationsthat may be generated. Element 100 comprises an embodiment of a systemconsistent with the invention. The system 100 operably communicates withone or more electronic databases 110. As noted above, there may be asingle database with loan registration information data structures,security fee obligation data, and billing data, or there may be multipledatabases, which may, in embodiments be distributed. In embodiments, oneor more of these databases may be maintained by the a universal clearingentity, such as the Depository Trust & Clearing Corporation (DTCC).

Loan data 120 may be obtained from one or more entities, represented byblock 130, which may comprise a lender, and/or a borrower, and/or anagent thereof, and/or a universal clearing entity, or other entity. Notethat this data may be obtained via an electronic computer to computercommunication, and/or orally, and/or by facsimile, and/or by mail, andthen keyed and/or scanned into the one or more databases.

Operations debiting one or more accounts and/or billing for the TransferFee is represented by the line 140. Where the security issuer accruesfees as income for the security, an accrual operation 150 with respectto a security issuer 160 or their designee is represented.

Embodiments of a method of operation are represented in FIG. 2. Block200 represents an operation of accessing, using one or more computers,Transfer Fee data in one or more databases on required Transfer Fees tobe paid to a third party that is not the borrower or the lender of asecurity for a right to loan one or more units of the security. Inembodiments, the third party may be a person, an account, an agent, adesignee, a security issuer, to name a few. The only limitation on thethird party is that it is not the lender or the borrower of thesecurity. In embodiments, a step may be performed of entering or havingentered in the one or more databases, the data on the required TransferFee to be paid to a third party that is not the borrower or the lenderof a security for a right to loan one or more units of the security.Note that in embodiments, the one or more databases may compriseTransfer Fee data for a plurality of securities of a plurality ofissuers. In embodiments, the one or more databases may comprise TransferFee data for only one Transfer Fee.

The Transfer Fee data may be obtained via an electronic computer tocomputer communication, and/or orally, and/or by facsimile, and/or bymail, and then keyed and/or scanned into the one or more databases. Asnoted, in embodiments some of the fee payment obligations may be derivedand/or extracted from prospectuses. This derivation and/or extractionmay be electronic via an electronic search for loan Transfer Feeobligations within a prospectus database, and/or may be manuallyobtained from a hard copy and keyed into the one or more databases.

In embodiments, registration of a loan may be accomplished through meanssuch as:

-   -   1) A secure web interface.    -   2) Phone call to an agent who enters the data via a terminal.    -   3) A direct computer to computer feed via dedicated lines,        private packet switched network or the Internet.    -   4) A faxed form to an agent who enters the data via a terminal.    -   5) A mailed form to an agent who enters the data via a terminal.    -   6) A computer feed from a stock loan industry facilitator, e.g.,        LoanNet.

The Transfer Fee for the right to make the loan may comprise, inembodiments, a fee to be calculated at least in part using a feealgorithm selected from the group of a fixed fee, a fee/per time period,a fee that varies at least in part with the length of the lendingperiod, a fee that varies at least in part based on the number of unitsof the security loaned, a fee that varies based at least in part on aprice of a unit of the security, a fee based at least in part on a totalvalue of the securities in the loan, a fee based on a volume of loansmade over time by a given lender or borrower, a relationship, a feebased at least in part on two dimensional tiering using the number ofunits loaned as one tier parameter, or a loan period as one tier, toname a few. In embodiments, the fee may accrue hourly, or daily, orweekly, or any other time period, or may accrue aperiodically based onanother parameter.

Block 210 comprises an operation of accessing, using the one or morecomputers, loan data on a loan of one or more units of the security. Inembodiments, the loan data may comprise a number of the units of thesecurity and/or value data for the security loaned, and anidentification of one or both a lender of the security and a borrower ofthe security. In embodiments, the loan data may further comprise one ormore of a length of time for the loan, fee rate per time period, to namea few. In embodiments, the loan data may comprise just the fact of aloan, but without a number of units loaned or a value of the security.In embodiments, the accessing loan data step 210 may comprise receivingnotification of a loan of units of the security from a universalclearing service for the security, e.g., the DTCC. In embodiments, anoperation may be performed of entering into the one or more databasesand/or receiving the loan data on the loan of the securities.

Block 220 comprises an operation of correlating/matching/crossreferencing, using the one or more computers, the loan data for the forthe loan of the security with the Transfer Fee data for the right toloan the security. In embodiments where the issuer or collectiveinvestment vehicle is operating the method, and may in some embodimentsalso be the third party to be paid, the correlation operation maycomprise simply matching the Transfer Fee for that collective investmentvehicle and the loan data obtained. In embodiments where the one or moredata bases comprise data on Transfer Fees for many securities, thisoperation may comprise determining a correct Transfer Fee from among theplurality of Transfer Fees in the one or more databases based at leastin part on identifying data for the security and/or the issuer of thesecurity from the loan data.

Block 230 comprises an operation of calculating or having calculated(e.g., outsourcing) and/or determining or having determined (e.g.,outsourcing) an amount of Transfer Fee for the right to loan the numberof units or value of the security based at least in part on the TransferFee data for the respective security. In embodiments, the calculatingand/or determining step may be based at least in part on a fee algorithmand the number of units of the security and/or value data for thesecurity. In embodiments, this operation may comprise calculating theamount by multiplying an amount of Transfer Fee per period per unit bythe number of units of the security loaned, by a number of periods thathave elapsed or will elapse for the loan. In embodiments, the amount maybe determined per period based at least in part on the fee Transfer Feedata per unit by the number of units of the security loaned. Inembodiments, the Transfer fee may be simply a flat fee for the loan or aflat fee per time period for the loan. In embodiments, the amount may beobtained or received from another system and/or entity. In embodiments,the Transfer Fee for an entire period of the loan may be calculated. Inembodiments, the fee may be a flat fee per time period regardless of thenumber of units loaned or the value of the loaned security. Inembodiments, the flat fee per time period may vary based on the lengthof the loan, e.g., the flat fee may increase or decrease for longer loanperiods.

Block 240 comprises an operation of debiting or having debited orgenerating the data for debiting at least one account and/or generatingor having generated and/or sending or having sent at least one bill,using the one or more computers, for the amount of the Transfer Fee tobe paid to the third party that is not the borrower or the lender of thesecurity for a right to loan the number of units or value of thesecurity. The amount debited and/or billed may be based at least in parton the calculating and/or determining step. In embodiments, a debitingoperation and/or a billing operation may be performed for every period.In embodiments, the fee amount for a plurality of periods of the loanmay be accumulated, and an accumulated sum may be debited and/or billed.Note that in embodiments, the type of account and the ownership of theaccount that is debited is not limiting on the invention. Inembodiments, the account debited may be an account associated directlyor indirectly with the lender of the securities. In embodiments, theaccount debited may be an account associated directly or indirectly withthe borrower of the securities. In embodiments, one or more accounts maybe debited for the lender and/or the borrower or their respective agentsor designees in a universal clearing service, e.g., the DTCC, for thesecurity.

The billing data may be maintained in one or more of the registrationdatabase, the Transfer Fee obligation database, and/or a separatebilling database. In embodiments, bills may be disseminated eitherelectronically, by mail, or both. Subsequent accounting and collectionprocesses and updating of databases with billings, debits, and paymentsreceived may be ongoing.

Block 250 comprises an optional operation of sending or having sent orgenerating or having generated, data on revenue to be paid to an issuerof the security. In embodiments where the security is issued by acollective investment vehicle or other entity where the Transfer Fee maybe accrued or is to be accrued, the optional step may be performed ofgenerating or having generated and/or sending or having sent data on theTransfer Fee accrued or to be accrued. In some embodiments, this datamay be used in calculating a net asset value (NAV) or revenues for thecollective investment vehicle or other entity, with the accrued TransferFee to be included as a part of a value of the collective investmentvehicle or other entity. In embodiments, this operation may be performedas each fee period elapses or may be accumulated and performed aftermultiple periods have elapsed, or may be performed on another schedule.In embodiments, an operation of accruing may be performed or instructedto be performed, by sending an instruction for the accrual operation. Inembodiments operated by a collective investment vehicle, the method mayfurther comprise calculating, using the one or more computers, a netasset value (NAV) for the collective investment vehicle, using theaccrued Transfer Fees as a part of a value of the collective investmentvehicle. In embodiments, the collective investment vehicle may be anexchange traded fund. In embodiments, the collective investment vehiclemay be a closed end fund.

Block 260 comprises an operation of updating, using the one or morecomputers, the one or more databases with the amount of the Transfer Feedetermined and/or calculated and/or debited and/or billed. Inembodiments, the one or more databases may be updated with an amount ofthe Transfer Fee actually received by the third party that is not theborrower or the lender of the security for the loan of the number ofunits of or value of the security or the fact of the loan. This updatingoperation may be performed electronically based at least in part oncomputer to computer communications, and/or may be keyed or scanned intothe one or more databases. In embodiments, the updating step may beperformed on a substantially real time basis as data is received on theloan of securities, and/or to reflect the debiting and/or billingoperations, and/or to reflect actual payments received by an account ofthe third party.

Note that it is contemplated that one or more of the foregoingoperations may be outsourced for performance.

As noted, in embodiments, the one or more databases may contain data fora prospectus for the security and/or a contract relating to thesecurity, with the data for the prospectus and/or the contract includinga fee algorithm or a reference to a fee algorithm.

In embodiments, the one or more databases may contain data for acontract comprising a trust agreement for the security.

In embodiments, the Transfer Fee may cash money.

In embodiments, the security may be an ETF unit or a closed end fundunit.

In embodiments, the security may be a bond or a share of common stock.

In embodiments, the billing step may comprise generating and sending orhaving sent a bill, for the amount of the Transfer Fee, based at leastin part on the calculating and/or determining step.

In embodiments, an operation may be performed of generating data, usingthe one or more computers, for providing a Web interface or otherInternet interface for receiving data on a loan of units of thesecurity. In embodiments, this interface data may be hosted on a Webpage on a server.

In embodiments, the accessing Transfer Fee data step may compriseobtaining identification of a borrower of the security and the lender ofthe security. In some embodiments, an operation may be performed ofallocating at least a portion of the fee amount to the borrower andallocating at least a portion of the fee amount to the lender. Anallocation algorithm may be used to apportion the fee between the lenderand the borrower based on one or more parameters, such as a length ofthe security loan, a number of units of the security in the loan, atotal value of the securities loaned, a number of loan transactions forthe respective lender or borrower in a given time period, a relationshipwith an entity such the universal clearing entity, to name just a few ofthe possible parameters.

In embodiments where both the lender of the securities and the borrowerare assessed fees, the fees actually paid by the respective lender andthe respective borrower for a security may be aggregated, using the oneor more computers, to determine if a full fee payment for the loan orfor the particular loan period has been recorded, or whether there is ashortfall, that must be made up. Alternatively, this shortfalldetermination may be made by comparing the amount billed to the partywith the amount received from the party. In embodiments where ashortfall has been determined, a debit of an account and/or billing toone of the lender and the borrower may be increased if the other of thelender and the borrower has caused the shortfall by failing to pay therequisite fees assessed to him/her for the loan. Thus, in embodiments,the method may further comprise an operation of assessing, using the oneor more computers, a larger fee or the entire fee amount against one ofthe lender and the borrower if the other of the lender and borrower hasnot paid their respective portion of the fee amount.

In embodiments, the method may further comprise an operation ofgenerating data, using the one or more computers, for an electronicscreen display representing a lender-borrower chain indicating all orsubstantially all lenders and borrowers of the respective security.

In embodiments, the method may further comprise an operation ofgenerating and sending or having sent, using the one or more computers,a notification of a lender-borrower chain for the loan of the security.In embodiments, this notification of the lender-borrower chain may besent to the IRS.

In embodiments, the method may further comprise an operation ofgenerating and sending or having sent, using the one or more computers,a notification of a dividend, interest or distribution paid to the ownerof the security. In embodiments, this notification of the dividend,interest or distribution may be sent to the IRS.

Accordingly, in embodiments a method is disclosed requiring one or moreparties to loan arrangements for securities to register their loans in acentral database or a distributed one or more databases, and to pay thecollective investment vehicle or other issuer or their respectivedesignees the Transfer Fee. An entity with access to this one or moredatabases may bill either the lender or the borrower or both. Inembodiments, this billing may be required in a collective investmentvehicle's prospectus.

In embodiments where a part of the Transfer Fee is required of both thelender and the borrower, a matching operation may be performed of thelender registration to the borrower registration, thereby increasingconfidence in fee payment compliance. In some embodiments of such anoperation, the method may further comprise receiving a registration of aloan of a security from one of the lender of the security or theborrower of the security; determining, using the one or more computers,if there is matching registration of the loan from the other of thelender and the borrower; and entering or having entered data, using theone or more computers, indicating matching registrations for the loan,or indicating a failure to determine matching registrations for theloan. The failure to obtain a match may be used to trigger, using theone or more computers, or by manual keying in the system, an assessmentof part or all of any fee shortfall to the registering party, and/orpenalties and/or interest against the party not providing theregistration of the loan.

In embodiments, the calculating and/or determining the amount of theTransfer Fee may comprise allocating at least a portion of the feeamount to each of the lender and the borrower. In some embodiments, feespaid by the respective lender and the respective borrower for a securitymay be aggregated to determine if there is a full fee payment for theloan, or whether there is a shortfall, that must be made up. In suchembodiments, a step may then be performed assessing, using the one ormore computers, all or a portion of the shortfall in the entire feeamount against one of the lender and the borrower if the other of thelender and borrower has not paid their respective portion of the feeamount. An operation would then be performed of debiting an accountand/or billing to one of the lender or borrower parties an increasedamount comprising all or a portion of the shortfall if the other of theparties has failed to pay their portion of the fees for the loan of thesecurity.

In embodiments where there has been a shortfall in fee payments, methodsteps may be performed of determining, using the one or more computers,interest and/or a penalty on one or both of the parties for anyshortfall or late payment of the fees for the loan, and debiting anaccount and/or billing to the one or both of the lender and the borrowerfor any shortfall or late payment of the fees for the loan.

In embodiments, the governing agreement for an issuer may include or bemodified to include a registration requirement for the lender and/or aborrower of the security. Such governing agreements may be a prospectus,a trust agreement, by-laws, and any other document binding the borroweror lender to pay the fees. The broker dealer community may be notifiedof this requirement. In embodiments, the method may further comprisewriting, using the one or more computers, an amendment to an electroniccopy of a prospectus in a prospectus database to add language on therequired Transfer Fee to be paid to the third party for a right to loanone or more units of the security.

Embodiments of a system and method may operate on a standalone basisand/or as part of a universal clearing service and/or as part of afinancial entity. In embodiments, one or more data items may compriseshort interest, identities of the borrower, the lender, agents, contractspecifications, method of Transfer Fee accrual, current accrued TransferFees, confidentiality issues such a security roles and access, to name afew.

Embodiments disclosed may serve the purpose of preventing parties fromfree-riding on collective investment vehicles or other issuers andobtaining exposure to notional value of the collective investmentvehicle units or other units without paying requisite management fees.This is inequitable both to the collective investment vehicle sponsor orother issuers who are deprived of its fee and the other owners of thecollective investment vehicle units who are deprived of the extra incomethat could be used to their collective benefit by the sponsor.

FIG. 3 is a block diagram illustrating an embodiment of a computersystem that may be used for implementations, generally designated byreference number 300 in FIG. 3. In embodiments, the system 300 may becommunicatively coupled to one or more networks 305 via a communicationinterface 395. The one or more networks 305 may represent a genericnetwork, which may correspond to a local area network (LAN), a wirelessLAN, an Ethernet LAN, a token ring LAN, a wide area network (WAN), theInternet, a proprietary network, an intranet, a telephone network, awireless network, to name a few, and any combination thereof. Dependingon the nature of the network employed for a particular application, thecommunication interface 395 may be implemented accordingly. The network305 serves the purpose of delivering information between connectedparties. Note that the computing and/or storage of data may be remote,e.g., so-called cloud computing and/or storage.

The system 300 may comprise, in embodiments, a computing platform forperforming, controlling, and/or initiating computer-implementedoperations, for example, via a server and the one or more networks 305.The computer platform may comprise system computers and other partycomputers. The system 300 may be include, one or more personalcomputers, workstations, notebook computers, servers, mobile computingdevices, handheld devices, multi-processor systems, networked personalcomputers, minicomputers, mainframe computers, personal data assistants,Internet appliances (e.g., a computer with minimal memory, disk storageand processing power designed to connect to a network, especially theInternet, etc.), or controllers, to name a few. The system 300 mayoperate under the control of computer-executable instructions to carryout the process steps described herein. Computer-executable instructionscomprise, for example, instructions and data which cause a general orspecial purpose computer system or processing device to perform acertain function or group of functions. Computer software for the system300 may comprise, in embodiments, a set of software objects and/orprogram elements comprising computer-executable instructionscollectively having the ability to execute a thread or logical chain ofprocess steps in a single processor, or independently in a plurality ofprocessors that may be distributed, while permitting a flow of datainputs/outputs between components and systems.

The system 300 may comprise, in embodiments, a bus 310 or othercommunication component that couples the various system elements320-395, and is configured to communicate information between thevarious system elements 320-395.

As shown in FIG. 3, the one or more computers may comprise one or morecomputer processors 320 coupled with the bus 310 and configured toprocess and handle information and execute instructions. The system 300may include a main memory 350, such as a Random Access Memory (RAM) orother dynamic storage device, coupled to the bus 300, for storinginformation and instructions to be executed by the one or moreprocessors 320. The main memory 350 also may be used for storingtemporary variables or other intermediate information during executionof instructions by the one or more processors 320.

The system 300 further may include a Read-Only Memory (ROM) 330 or otherstatic storage device (e.g., EPROM, EAROM, EEPROM, PROM, flash, and thelike) coupled to the bus 310 for storing static information andinstructions for the one or more processors 320. Furthermore, a storagedevice 340, such as a magnetic disk or optical disk, such as a CD-ROM orother optical media may be provided and coupled to the bus 310 forstoring information and instructions.

In addition to the ROM 330, one or more databases 360 may be coupled tothe bus 310 for storing static information and software instructions.Information stored in or maintained in the database 360 may be providedin conformance with a database system format such as, but not limitedto, the Structured Query Language (SQL) format. Database query andaccess instructions, for example, in the form of one or more scripts,may be used which, when executed by a processor such as the processor320, serve to access, store and retrieve data maintained in the database360 according to the instructions contained in the script.

Furthermore, the system 300 may comprise application softwareinstructions which may implement a user interface portion for generatinginteractive pages or display screens by which a user may provide data toand receive information from the system 300 and the database 360 using ahuman-machine interface. Interactive pages may include user dialog boxesfor accepting user entered information. In particular, the human-machineinterface may comprise a Graphical User Interface (GUI) portion forprompting the user to enter data by providing an interactive dialog boxor message box instructing the user to enter particular data, or toselect from among a multitude of options provided using a pull-downmenu. A user may interact with the system 300 via the graphical userinterface by using a pointing device and/or data entry device. The GUIportion may place the output of the system 300 in a format forpresentation to a system user via the display. In at least oneembodiment, the GUI may be implemented as a sequence of Javainstructions.

A data entry device 370, including alphanumeric and other keys, or apointing device such as a mouse or trackball, or a scanner, to name afew, may be coupled to the bus 310 for communicating information andcommand selections to the processor 320. The data entry device 370 maybe coupled to the bus 310 via an interface (not shown), wherein theinterface may be, for example, a serial port, an RS-232 port, or thelike. In addition, the interface may be a wireless interface and provideconnection-less communication via, for example, Bluetooth communication.

The system 300 may be coupled via the bus 310 to a display or printer390 for outputting information to a system user. In addition, a systemuser may use the display (e.g., touch screen) or printer (e.g., scanner)to provide information to the system 300.

In embodiments, the various program operations as described herein maybe provided by the system 300 in response to the one or more processors320 executing one or more sequences of computer-readable instructionscontained in the main memory 350. Such instructions may be read into themain memory 350 from another computer-readable medium, such as the ROM330, the storage device 340, or the database 360. Execution of thesequences of instructions contained in the main memory 350 may cause theone or more processors 320 to perform the process steps describedherein. It should be appreciated that an embodiment of the system 300may perform fewer or additional processes as compared to those describedherein. As noted, the one or more processors 320 may be arranged in amulti-processing arrangement. Alternatively, hard-wired circuitry may beused in place of or in combination with software instructions toimplement the invention. Thus, embodiments of the invention are notlimited to any specific combination of hardware circuitry and software.

Embodiments include program products comprising machine-readable mediawith machine-executable instructions or data structures stored thereon.Such machine-readable media can be any available storage media which canbe accessed by a general purpose or special purpose computer or othermachine with a processor. By way of example, such machine-readable mediacan comprise RAM, ROM, EPROM, EEPROM, CD-ROM or other optical diskstorage, magnetic disk storage or other magnetic storage devices, or anyother storage medium which can be used to store desired program code inthe form of machine-executable instructions or data structures and whichcan be accessed by a general purpose or special purpose computer orother machine with a processor. Combinations of the above are alsoincluded within the scope of machine-readable media. Machine-executableinstructions comprise, for example, instructions and data which cause ageneral purpose computer, special purpose computer, or special purposeprocessing machines to perform a certain function or group of functions.

Embodiments of the invention have been described in the general contextof method steps which may be implemented in embodiments by a programproduct including machine-executable instructions, such as program code,for example in the form of program modules executed by machines innetworked environments. Generally, program modules include routines,programs, objects, components, data structures, etc., that performparticular tasks or implement particular data types. Multi-threadedapplications may be used, for example, based on Java or C++.Machine-executable instructions, associated data structures, and programmodules represent examples of program code for executing steps of themethods disclosed herein. The particular sequence of such executableinstructions or associated data structures represent examples ofcorresponding acts for implementing the functions described in suchsteps.

As noted, embodiments of the present invention may be practiced with oneor multiple computers in a networked environment using logicalconnections to one or more remote computers (including mobile devices)having processors. Logical connections may include a local area network(LAN) and a wide area network (WAN) that are presented here by way ofexample and not limitation. Such networked environments are commonplacein office-wide or enterprise-wide computer networks, and includeintranets and the Internet, and may use a wide variety of differentcommunication protocols. Those skilled in the art will appreciate thatsuch network computing environments will typically encompass many typesof computer system configurations. Embodiments of the invention may alsobe practiced in distributed computing environments where tasks areperformed by local and remote processing devices that are linked (eitherby hardwired links, wireless links, or by a combination of hardwired andwireless links) through a communications network. In a distributedcomputing environment, program modules may be located in both local andremote memory storage devices.

As previously noted, the system 300 also comprises a communicationinterface 395 coupled to the bus 310 for providing one-way, two-way ormulti-way data communication with the network 305, or directly withother devices. In embodiments, the communication interface 395 maycomprise a modem, a transceiver Integrated Services Digital Network(ISDN) card, a WAN card, an Ethernet interface, or the like, to providea data communication connection to a corresponding type of communicationmedium. As another example, the communication interface 395 may comprisea LAN card to provide a data communication connection to a compatibleLAN. Wireless links may also be implemented. In such wireless links,communication interface 395 may communicate with a base stationcommunicatively coupled to a network server. In any such implementation,the communication interface 395 sends and receives electrical,electromagnetic, radio, infrared, laser, or optical signals that carrydigital data streams representing various types of information. Anycombination of the above interfaces may also be implemented.

In embodiments, the communication interface 395 may be communicativelycoupled to a web server configured to generate and output web contentthat is suitable for display using a web browser at a computing device.In embodiments, the server may generate and transmit requestedinformation through the communication interface 395 to a requestingterminal via Hypertext Transfer Markup Language (HTML) formatted pages,eXtensible Markup Language (XML) formatted pages, or the like, which maybe provided as World Wide Web pages that may enable navigation byhyperlinks. The server program may be used to receive commands and datafrom the clients' terminals, access and process data from varioussources, and output computer-executable instructions and data using thenetwork 305.

The web server, in embodiments, may correspond to a secure webapplication server operating behind a web server program that a serviceprovider employs to run one or more web based application programs tocarry out the methods described above in a secure fashion. Such a secureweb application server may be configured to execute one or more webbased application programs, respond to commands and data received fromthe clients (via a web page supported by the web server), and providedata and results to the clients. The web server and the web applicationserver may be implemented using a single computing platform.Alternatively, it may be implemented using multiple separate anddistributed computing platforms.

Referring to FIG. 4, the one or more computers of the system may, inembodiments, be configured with the illustrated components and/ormodules stored separately or in combination. In the embodiment shown inFIG. 4, the one or more computers are configured, with data access andupdate program code 420 for accessing data and for updating the one ormore databases. FIG. 4 further comprises correlating program code 430for correlating/matching loan data on a loan of a security with theTransfer Fee data to be paid to the third party for the right to loanthat security. FIG. 4 further comprises Transfer Fee calculation programcode 440 for calculating or determining an amount of Transfer Fee forthe right to loan the number of units in the loan data or the value ofthe security loaned and/or just the fact of the loan. FIG. 4 furthercomprises debiting/billing program code 450 for debiting and/or billingthe amount of the Transfer Fee that was determined. FIG. 4 furthercomprises accrual program code 460 for generating or having generated orsending or having sent data on the Transfer Fee accrued or to beaccrued. Various other program code may also be included such as areports program module, to name a few.

It should be noted that although the flow charts provided herein show aspecific order of method steps, it is understood that the order of thesesteps may differ from what is depicted. Also two or more steps may beperformed concurrently or with partial concurrence. Such variation willdepend on the software and hardware systems chosen and on designerchoice. It is understood that all such variations are within the scopeof the invention. Likewise, software and web implementations of thepresent invention could be accomplished with programming techniques withrule based logic and other logic to accomplish the various databasesearching steps, correlation steps, comparison steps and decision steps.It should also be noted that the word “component” as used herein and inthe claims is intended to encompass implementations using one or morelines of software code, and/or hardware implementations. It should alsobe noted that the phrase “a plurality” is intended to mean more thanone, and is not intended to refer to any previous recitation of the word“plurality,” unless preceded by the word “the.”

All components, modes of communication, and/or processes describedheretofore are interchangeable and combinable with similar components,modes of communication, and/or processes disclosed elsewhere in thespecification, unless an express indication is made to the contrary. Itis intended that any structure or step of an embodiment disclosed hereinmay be combined with other structure and or method embodiments to forman embodiment with this added element or step.

While this invention has been described in conjunction with theexemplary embodiments outlined above, it is evident that manyalternatives, modifications and variations will be apparent to thoseskilled in the art. Accordingly, the exemplary embodiments of theinvention, as set forth above, are intended to be illustrative, notlimiting. Various changes may be made without departing from the spiritand scope of the invention.

We claim:
 1. A method, comprising: accessing, by one or more computers, Transfer Fee data held in one or more databases on a required Transfer Fee to be paid to a third party that is not the borrower or an owner/lender of a security for a right to loan one or more units of the security, wherein the security comprises one or more selected from the group of an exchange traded product unit, a bond, a common stock, and a closed end collective investment vehicle unit; accessing, by the one or more computers, loan data on a loan of one or more units of the security, the loan data comprising the number of the units of the security and/or value data for the security loaned, and an identification of one or more of an owner/lender of the security or a borrower of the security; correlating, by the one or more computers, the loan data for the loan of the security with the Transfer Fee data for the right to loan the security; calculating or having calculated and/or determining or having determined, by the one or more computers, an amount of a Transfer Fee for the right to loan the number of units or value of the security based at least in part on the Transfer Fee data for the respective security; debiting or having debited and/or generating data for debiting at least one account and/or generating or having generated and/or sending or having sent at least one bill, by the one or more computers, for the amount of the Transfer Fee to be paid to the third party that is not the borrower or the owner/lender of the security for a right to loan the number of units or value of the security, based at least in part on the calculating and/or determining step; sending or having sent or generating or having generated, data on an amount of revenue from one or more of the Transfer Fees to be paid for the security issued by a collective investment vehicle or other entity where the Transfer Fee may be accrued or is to be accrued; wherein the Transfer Fee is based at least in part on a fee algorithm comprising an amount time period, wherein the sending or having sent or generating or having generated or making accessible electronically data step further comprises accruing the amount of the Transfer Fee for the right to loan the number of units or the value of the security of the collective investment vehicle as the time periods for the loan of the security elapse, and updating or having updated, by the one or more computers, the one or more databases periodically or on an ad hoc basis to obtain a current accrued amount of the Transfer Fee for the loan of the number of units or value of the security for use in calculating a net asset value (NAV) for the collective investment vehicle, wherein the one or more databases contain information pertaining to terms related to calculation of the Transfer Fee as described in a trust agreement and/or prospectus for the security.
 2. The method as defined in claim 1, wherein the Transfer Fee is cash.
 3. The method as defined in claim 1, wherein the security was issued by an ETF collective investment vehicle and is an exchange traded fund unit.
 4. The method as defined in claim 1, wherein the security is a bond.
 5. The method as defined in claim 1, wherein the security is a common stock.
 6. The method as defined in claim 1, wherein the security is a closed end collective investment vehicle unit.
 7. The method as defined in claim 1, wherein the Transfer Fee comprises a fee to be calculated at least in part using a fee algorithm selected from the group of a fee that varies at least in part on the number of units of the security loaned, a fee that varies at least in part on a price of a unit of the security, and a fee based on two dimensional tiering using the number of units loaned as one tier parameter and time as another tier parameter.
 8. The method as defined in claim 1, wherein the updating step is performed on a substantially real time basis as data is received on the loan of the security.
 9. The method as defined in claim 1, comprising the debiting of an account associated directly or indirectly with the owner/lender of the security based at least in part on the calculating and/or determining step.
 10. The method as defined in claim 9, wherein the account is held by the owner/lender in a universal clearing service for the security.
 11. The method as defined in claim 1, comprising generating and sending or having sent a bill, for the amount of the Transfer Fee, based at least in part on the calculating and/or determining step.
 12. The method as defined in claim 1, further comprising generating data, by the one or more computers, for providing a Web interface for receiving data on a loan of units of the security.
 13. The method as defined in claim 1, wherein the receiving data step comprises receiving notification of a loan of units of the security from a universal clearing service for the security.
 14. The method as defined in claim 1, wherein the accessing Transfer Fee data step comprises obtaining identification of both the owner/lender of the security and the borrower of the security.
 15. The method as defined in claim 14, wherein the calculating and/or determining the amount of the Transfer Fee comprises allocating at least a portion of the fee amount to each of the owner/lender and the borrower.
 16. The method as defined in claim 15, further comprising: aggregating fees, by the one or more computers, paid by the owner/lender and/or the borrower to determine if there is a full fee payment of the Transfer Fee for the loan, or whether there is a shortfall; assessing, by the one or more computers, all or a portion of the shortfall in the entire Transfer Fee amount against one of the owner/lender or the borrower if the other of the owner/lender or borrower has not paid their respective portion of the fee amount; and debiting an account and or billing to one of the owner/lender or the borrower an increased amount comprising all or a portion of the shortfall if the other of the owner/lender or the borrower has failed to pay their portion of the fees for the loan.
 17. The method as defined in claim 15, further comprising: determining, by the one or more computers, interest and/or a penalty on one or both of the parties for any late payment of the Transfer Fees for the loan; and debiting an account and or billing to the one or both of the owner/lender or borrower parties for any late payment of the Transfer Fees for the loan.
 18. The method as defined in claim 1, further comprising: wherein the accessing Transfer Fee data step comprises obtaining a registration of a loan of the security from one of the owner/lender of the security or the borrower of the security; determining, by the one or more computers, if there is a matching registration of the loan from the other of the owner/lender or the borrower; and entering or having entered data, by the one or more computers, indicating matching registrations for the loan, or a failure to determine matching registrations for the loan.
 19. The method as defined in claim 1, further comprising generating data, by the one or more computers, for an electronic screen display representing a lender-borrower chain.
 20. The method as defined in claim 1, further comprising: writing, using the one or more computers, an amendment to a prospectus in a prospectus database to add language on the required Transfer Fee to be paid to the third party for a right to loan one or more units of the security.
 21. The method as defined in claim 1, further comprising: generating and sending or having sent, by the one or more computers, a notification of a lender-borrower chain for the loan of the security.
 22. The method as defined in claim 1, further comprising: generating and sending or having sent, by the one or more computers, a notification of a dividend, interest or distribution associated with an owner of the security.
 23. The method as defined in claim 1, further comprising: calculating or having calculated, by the one or more computers, a net asset value (NAV) for the collective investment vehicle, using the accrued Transfer Fees as a part of a value of the collective investment vehicle.
 24. The method as defined in claim 23, wherein the collective investment vehicle is an exchange traded fund.
 25. The method as defined in claim 23, wherein the collective investment vehicle is a closed end fund.
 26. A system, comprising: one or more computers, configured to perform the following steps: accessing, by the one or more computers, Transfer Fee data held in one or more databases on a required Transfer Fee to be paid to a third party that is not a borrower or an owner/lender of a security for a right to loan one or more units of the security, wherein the security comprises one or more selected from the group of an exchange traded product unit, a bond, a common stock, and a closed end collective investment vehicle unit; accessing, by the one or more computers, loan data on a loan of one or more units of the security, the loan data comprising the number of the units of the security and/or value data for the security loaned, and an identification of one or more of an owner/lender of the security or a borrower of the security; correlating, by the one or more computers, the loan data for the loan of the security with the Transfer Fee data for the right to loan the security; calculating or having calculated and/or determining or having determined, by the one or more computers, an amount of a Transfer Fee for the right to loan the number of units or value of the security based at least in part on the Transfer Fee data for the respective security; debiting or having debited and/or generating data for debiting at least one account and/or generating or having generated and/or sending or having sent at least one bill, by the one or more computers, for the amount of the Transfer Fee to be paid to the third party that is not the borrower or the owner/lender of the security for a right to loan the number of units or value of the security, based at least in part on the calculating and/or determining step; sending or having sent or generating or having generated, data on an amount of revenue from one or more of the Transfer Fees to be paid for the security issued by a collective investment vehicle or other entity where the Transfer Fee may be accrued or is to be accrued; wherein the Transfer Fee is based at least in part on a fee algorithm comprising an amount per time period, wherein the sending or having sent or generating or having generated or making accessible electronically data step further comprises accruing the amount of the Transfer Fee for the right to loan the number of units or the value of the security of the collective investment vehicle as the time periods for the loan of the security elapse, and updating or having updated, by the one or more computers, the one or more databases periodically or on an ad hoc basis to obtain a current accrued amount of the Transfer Fee for the loan of the number of units or value of the security for use in calculating a net asset value (NAV) for the collective investment vehicle, wherein the one or more databases contain information pertaining to terms related to calculation of the Transfer Fee as described in a trust agreement and/or prospectus for the security.
 27. The method as defined in claim 1, wherein the security is issued by a collective investment vehicle that charges a management fee.
 28. The system as defined in claim 26, wherein the security is issued by a collective investment vehicle that charges a management fee. 